The U.S. Postal Service Office of Inspector General (OIG) Field Financial Risk Model identified the Summerland Key, FL, Post Office made $61,656 in local purchases and payments using 88 no-fee money orders (NFMO) October 1, 2016, to September 30, 2017. This unit made 82 percent of all local purchases within the South Florida District during that period.

The Postal Service prefers to pay for its goods and services through its electronic purchasing system. When that is not possible, authorized users may use assigned credit cards. Cash not to exceed $25 or a NFMO not to exceed $1,000 may be used to make a one-time emergency payment. In addition, local payments made to individuals, proprietorships, or corporations with cash or money orders must be reported for tax purposes. Further, the vehicle credit card must be used for maintenance repair of postal vehicles.

The objective of this audit was to determine whether internal controls were in place and effective for making local purchases and payments at the Summerland Key, FL, Post Office.

What the OIG Found

Internal controls for local purchases and payments were in place, but were not always effective at the Summerland Key, FL, Post Office. We reviewed 88 NFMOs used for 38 payments identified from October 1, 2016, to September 30, 2017. Unit personnel made 24 of 38 local payments valued at $59,852 for cleaning services and vehicle repairs using 74 NFMOs instead of the Postal Service’s preferred methods of payment. Specifically, the unit’s management made:

Twenty-two of the 38 payments using 69 NFMOs totaling $56,180 to one vender for cleaning services.The unit did not have an authorized contract to make these payments as required.

Two of the 38 payments totaling $3,672 using five NFMOs to a local vehicle services company instead of using the vehicle credit card as required. The unit did not have authorization from the responsible Vehicle Maintenance Facility manager or their designee.

This occurred because the postmaster was not aware of the Postal Service’s preferred payment methods and the supervisor, who was the acting postmaster during the postmaster’s absence was not aware of the process to pay for the vehicle service charges. In addition, unit management had not completed the required eBuy and vehicle credit card for Site Manager training as required.

Further, unit personnel did not collect vendor tax data for the 24 payments of services using 74 NFMOs valued at $59,852 as required by federal law. Unit personnel stated they were unaware of the policy to submit the required form to the Internal Revenue Service for services paid.

We referred these issues to the OIG’s Office of Investigations for further review.

When internal controls are not effective, the Postal Service has an increased risk of:

Unauthorized transactions using NFMOs for services.

Violating federal law if tax reportable payments are not reported, as required.

As a result of this audit, the postmaster contacted headquarters to establish a contract for cleaning services on November 21, 2017.

Require all unit management to complete eBuy training, focusing on procedures for local purchases and payments.

Require all unit management to complete Voyager card training, focusing on procedures for the use of the office’s vehicle credit cards for vehicle repair charges.

Reiterate to all unit personnel the IRS reporting requirements as applicable and to submit Postal Service Form 8231, Vendor Payment 1099 Reporting Form, to Accounting Services to report the $59,852 vendor service payments.

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